How a little black box under the dashboard could cut your car insurance as EU rule change is set to hammer female drivers

Nursery nurse Laura Keely is convinced she is a safe and responsible driver.

The 21-year old from Birmingham doesn’t speed, has a light touch on the brakes and always takes the utmost care when parking.

Yet because of new European Union rules which will stop insurers from charging a different price for men and women, Laura, and thousands of other young females, will see premiums shoot up on Friday.

The EU directive means that all other things being equal, women will have to pay the same price as men for car insurance. And as young male drivers are by far the most dangerous, premiums for the opposite sex could rise by £300.

So, rather than pay more, Laura decided to let her insurer be the judge of how good a driver she is.

She opted to have a little black box put in under the dashboard of her Vauxhall Corsa by Insurethebox.

In a nutshell, the black box is a tiny computer — installed by a specialist — bristling with software which tracks her every move, driving style and habits.

At the end of the month, the insurer downloads the data and gives her a score out of 100.

The better she drives, the cheaper her policy will be at the point of renewal. And Laura has been rewarded for her gamble.

In 2011, the first year with the new Insurethebox technology installed, she paid £1,800 for a comprehensive policy.Twelve months on, her premiums have dropped to just £1,000 — a 44 pc fall.

She says: ‘I regularly scored 80 or 90 out of a possible score of 100 each month. It’s only because I regularly drive on motorways that I lost marks.

‘The good thing about this style of insurance is that you’re not all tarred with the same brush. You’re treated as an individual, regardless of age or whether you’re a man or a woman’.

She had been outraged by price comparison websites which quoted her as much as £3,000 plus to insure her Corsa.

The Government is keen on black-box technology — or telematics — as a way to give young drivers such as Laura more choice, and affordability, when it comes to car insurance.

Others offering the service include the AA, Direct Line and Co-operative — the latter found its black-box customers were 20 pc less likely to make a claim. Tellingly, the Co-op found, the average damage costs it saw were a third lower than on a typical claim.

Many see the growing creep of the black-box as the best way to bring down insurance premiums.

As fraud and claims continue to push up annual insurance costs for all motorists, being rewarded with lower premiums for being a low-risk driver is becoming increasingly attractive.

From December 21, insurers will still ask you to tick a box stating your sex and marital status. But they won’t be able to treat you differently because of this information. If the only difference between two applications is that one is a Mr and one is a Mrs, insurers will have to quote exactly the same price.

Young women drivers like Ms Keely are expected to be hit hardest by the change. At present, women pay less for car insurance than men because — statistically — insurers have to pay out less for accidents. A 20-year-old female driver currently pays average annual car cover of £1,707, according to comparison website Confused. A man of the same age typically pays £3,314.

HOW THE EU HIT YOUR PREMIUMS

In March the European Union ruled that finance companies would no longer be able to use your gender when deciding what to charge you.

The ban comes in to force on Friday.

It followed a fierce campaign for UK firms which argued that they were not discriminating between the sexes — but instead were basing their prices on statistics.

They claimed that as women live longer they pay less for life insurance, and get cheaper car cover because they have fewer accidents. The move to so-called gender-neutral pricing will affect premiums for all types of insurance — including car, life, private medical and income cover.

And it will also impact annuities, which are used to turn pension savings into a stream of income.

It could mean women having to pay more for car insurance and life cover but gain more pension income. Conversely, it is thought men may get less pension income.

As drivers get older, the price gap closes. But until they hit 70 females pay considerably less than men. A 40-year-old woman is charged an average of £502 for an annual policy, whereas a man’s is £603. From midnight on Thursday, premiums may rise by an average of £58 for women, but by around £300 for those aged under 25.

This sounds as if it could be an disaster. But there is still good news because men and women don’t drive the same cars, in the same way, or even at the same times of day — and insurers know it.So even if you’re not ready to have your every journey tracked by a computer, there are still other ways you can cut your bill.

Number crunchers at these giant firms are finding new ways to reward better drivers. And they have mountains of data which is likely to mean women will still get cheaper premiums. In the long run it could even lead to bad drivers paying increasingly more.

Gareth Kloet from Confused says: ‘Insurers will become more sophisticated in how they price premiums. Currently insurers look primarily at a driver’s gender, age, the type of car they drive, how many miles they travel, their occupation and where they live.

‘Take sex out of it and insurers will spread the weighting across the remaining factors. And they will look to reward predominantly female-like behaviour.

‘So a man in an occupation held by more women, with a car typically driven by women will get all the benefits he might have missed out on.’

Kevin Pratt, of comparison site Moneysupermarket, says: ‘There will be a period of adjustment in the new year as insurers work on their systems. But things will settle down.

‘If you’re deserving of a certain premium now and you don’t change as a driver, you should be entitled to the same price after the ruling comes in. Insurers need to find ways of identifying those safer drivers.’

But for drivers who aren’t keen on their insurer monitoring their every move, there are still ways in which better drivers — and in particular, women — will be rewarded with lower premiums.

YOUR JOB MATTERS

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Despite the gender divide narrowing over the years, there are still many jobs that are predominantly held by women.

And the statistics show drivers in these roles have fewest accidents. This isn’t going to change just because insurers don’t differentiate between men and women, so these roles will be rewarded with lower cost insurer.

Take nurses. They have the cheapest car insurance premiums because they make the fewest claims, according to Moneysupermarket. In 2011 nine out of ten nurses and 99 pc of midwives were women, according to the Nursing and Midwifery Council.

Generally speaking, the better- paid your profession, the higher your premiums. This is largely because wealthier workers can afford to buy fast, expensive vehicles which are costly to repair. Men earn, on average, nearly 10 pc more than women. Unsurprisingly, the highest premiums in the country belong to motor racing drivers and professional footballers — both professions dominated by men.

Bouncers have a notoriously hard time getting car insurance. Driving at night, working in inner cities and the danger they might upset someone who takes revenge on their car all mean they are higher risk.

YOU ARE WHAT YOU DRIVE

Men and women have very different taste in cars. Statistically, women prefer to drive those with smaller engines. Nine out of ten drivers who have 1-litre cars are women, while nine out of ten drivers with 3-litre cars are men.

There are also certain vehicles that are particularly popular with one sex.

The majority of those who drive a Ford StreetKa are female.

Conversely, there are many more males behind the wheel of a Nissan GT-R sports car, says Diamond insurer.

And men are also more likely to make modifications that enhance the performance of their car and increase the cost of their insurance, according to Moneysupermarket.

Insurers already consider the type of car you drive when pricing your premiums. Each model is put in a group between one and 50, depending on how fast it can go, how costly it is to repair and how easy it is to steal. The lower the group, the cheaper your premiums.

From Friday, experts say insurers may begin to pay even more attention to this data, giving even higher discounts for safer, smaller engine, cars.

STUCK IN A FLOOD? YOU MUST BE MALE

If you've ever been involved in an accident — and chances are most drivers will be at some point in their lives — then this information will play an even larger part in pricing premiums.

Insurers know exactly what type of accidents the different sexes typically have and use it to decide whether you are low or high risk.

Figures supplied to Money Mail by Diamond show men are much more likely to make a claim after hitting an animal, driving through a flood, or smashing in to a crash barrier.

Women, on the other hand, have a greater tendency to hit parked cars, collide with other moving vehicles in car parks or have a shunt in a queue of traffic.

Men are much more likely to be involved in more serious crashes, meaning their accidents are more expensive to sort out.

A PERK FOR DOING THE SCHOOL RUN

Insurers also know the typical time of day the different sexes drive — and how their behaviour at the wheel differs.

For this reason, they are keen to put the black-box technology in to more vehicles.

A little on-board computer, installed under the dashboard, records not only when and how fast you drive, but how heavily you brake or how sharply you corner. Those who drive well — that is, who don’t speed or brake suddenly — are rewarded with insurance discounts.

Figures from insurers show men drive faster, brake harder, corner more sharply and accelerate more swiftly than women. They also drive more frequently and go for longer distances without breaks. There are a third more men on the roads at night — with women motorists much more likely to drive during the school run.

So black-box technology could really help women lower their premiums. Better drivers are likely to be rewarded more because it is easier for the insurer to identify who they are.

Figures from the Co-op Bank, which offers black boxes on its car cover, show 31 pc of 17 and 18-year-old males earn a discount.

But 60 pc of women of the same age get money off.

BUT PREMIUMS WILL STILL RISE

Just because insurers will find new ways to reward better drivers doesn’t mean average premiums won’t go up.

Car insurance has been rising steadily for almost a decade now, and it is highly likely it will continue to do so. Red tape, more expensive cars, and high levels of fraud are all factors which have pushed up costs for ordinary drivers who have never made a claim.

And history shows that whenever insurers tinker with prices they can’t help but to pocket a little bit for their profits.